BSE planning to set up SME exchange

Asia's oldest bourse, the Bombay Stock Exchange, plans to set up a separate exchange for small and medium-size enterprises, a senior BSE official said on Tuesday.

"We plan to start a SME exchange as per market regulator Sebi's guidelines. With this, we are targeting a wide range of customers. Currently, our discussions are on with various merchant bankers and brokers to get feedback," BSE deputy chief executive officer Ashish Chauhan told PTI on the sidelines of an industry conference in Mumbai.

Currently, there are almost 3,000 SMEs trading through the BSE, Chauhan said.

"It may take nearly six months for the launch. We will not do anything in a hurry," he said.

Apart from the BSE, the National Stock Exchange and new entrant MCX Stock Exchange have also shown an interest in setting up an SME exchange.

Market regulator Securities and Exchange Board of India laid the groundwork to allow small and medium enterprises to list on SME exchanges recently.

In addition, the Bombay Stock Exchange is also looking at mobile trading, a multi-exchange algorithmic trading platform, option market making, third-party warrants, stock lending and borrowings and the delivery-based derivatives market, Chauhan said.

SMEs have always complained of difficulty in accessing both debt and equity capital. While the government has taken several measures to ease access to credit, giving them easier access to equity is the next step in that process.

Sebi has relaxed the listing requirements for small and medium enterprises on the proposed stock exchanges dedicated to the sector, which is likely to encourage SMEs to get listed.

Among the major relaxations, the listed SMEs can send shareholders an abridged annual report, instead of a full version, according to Sebi.

SMEs' contribution to the economy has been significant, accounting for around 20 per cent of the GDP and employing over 25 million people.

With the Indian economy growing at more than 9 per cent and the size of the economy crossing the $1 trillion mark, the need of SMEs to raise capital is becoming increasingly critical.